MAYOR BLOOMBERG ANNOUNCES SETTLEMENT WITH THE LEGAL AID SOCIETY ENDING 25-YEAR LITIGATION AND COURT OVERSIGHT OF HOMELESS FAMILY SERVICES SYSTEM

Ending Litigation a Long-standing Goal for the Bloomberg Administration

Litigation
Against State Also Dismissed

Mayor Michael R. Bloomberg and The Legal Aid Society
Attorney-in-Chief Steven Banks today announced an agreement dismissing the
McCain, Lamboy, Slade, and Cosentino collection of lawsuits, which together have
governed the homeless services system for families with children in New York
City for 25 years. The agreement, signed by the parties today, ends
litigation and court oversight of the City's family shelter services
system. Nearly three years ago, a court-appointed Special Master Panel
evaluated the homeless services system and unanimously recommended the end to
litigation. The Mayor and Attorney-in-Chief Banks were joined in the Blue
Room at City Hall by Deputy Mayor for Health and Human Services Linda I. Gibbs,
Corporation Counsel Michael A. Cardozo, Department of Homeless Services (DHS)
Commissioner Robert V. Hess, and State Office of Temporary and Disability
Assistance (OTDA) Commissioner David A. Hansell.

"Today marks the beginning of a new era - an era in which the need
for court oversight is over and we can all move forward in our shared commitment
to effectively meeting the needs of homeless families," said Mayor Bloomberg.
"The family shelter system of today focuses on prevention like never before,
helps families find permanent housing like never before, and balances rights
with responsibilities like never before. Today's historic agreement not only
recognizes the tremendous progress we've made over the past six and a half
years, it frees us to make even more."

"Today is a historic day for homeless children and their families
in this City. We have been able to reach a break-through settlement of 25 years
of litigation that will benefit all the people of this City by ensuring that
homeless families with children will be treated appropriately and in accordance
with legal requirements to which we have all now agreed," said The Legal Aid
Society Attorney-in-Chief Steven Banks who worked on the litigation with the law
firm of Cravath, Swaine & Moore.

To bring the cases to a close, the parties agreed a new case would
be filed and, following a class action settlement hearing at which the court
will be asked to approve the settlement, all cases against the City and State,
as well as the new one, would be dismissed. Thereafter, the court will no longer
retain jurisdiction and no further claims or motions can be brought before the
court related to these lawsuits. The City will regain full control and oversight
of its family services system, no longer having to enforce over 40
highly-detailed court orders or spend precious staff time and agency resources
complying with or litigating these cases.

As part of the settlement, the parties have agreed that New York
City would continue its long-standing interpretation of state and local laws
ensuring safe and decent emergency shelter for homeless families with
children. The settlement also includes provisions that outline current
agency standards and protocols for assessing shelter eligibility; under the
terms of the agreement, these provisions sunset on December 31, 2010, unless the
agency were to be found in "systemic non-compliance" with its provisions in a
separate successful litigation.

"With the Mayor's commitment to make real change at the EAU of the
past, and the guidance and support of the Special Master Panel in 2004, the
Department of Homeless Services was able to entirely transform the intake
process to both ensure humane and respectful assessment of family need while
restoring government's accountability," said Deputy Mayor Gibbs. "This
settlement affirms the integrity and success of that transformation."

"The 25-year McCain litigation long ago ceased to be useful or
relevant, and the myriad court orders and continued court oversight
substantially interfered with the City's ability to provide efficient and
compassionate homeless services. I am very pleased that we have reached an
agreement that brings the litigation to a long-overdue end," said New York City
Law Department Corporation Counsel Michael A. Cardozo.

"After more than 25 years, we have removed a roadblock to New
York's homeless services progress," said Commissioner Hess. "For too long, New
York was hampered by endless hours spent in litigation and legal paperwork. Now,
DHS can focus on its true priority, safely and effectively providing shelter and
helping our clients become stably re-housed in the community. We will only
continue to make the system better from here."

"This historic settlement reaffirms Governor David A. Paterson's
commitment to help those who for any number of reasons find themselves in need
of emergency shelter," said OTDA Commissioner Hansell. "As part of this
settlement, OTDA will continue its practice of providing fair hearings to those
in need of shelter on a priority basis."

"I was pleased to learn that the parties have resolved these long
running litigations," said John Feerick, one of the three members of the Special
Master Panel that between 2003 and 2005 studied City homeless policies and made
a series of recommendations in an effort to bring the cases to an end.
"Sometimes, even when your efforts don't immediately bear fruit they are part of
a longer process that ultimately helps end the controversy. I salute all
the parties to this settlement."

History of the Litigation

In May 1983, McCain vs. Koch was brought against the City alleging
insufficient shelter capacity and lack of standards governing shelter for
homeless families with children. The City remained under court oversight through
four mayoral administrations until 2003, when the parties agreed to a two-year
moratorium in litigation while a court-appointed Special Master Panel embarked
upon an exhaustive review of the family shelter system. During the hiatus,
DHS achieved far-reaching reform of the family shelter system. As a
result, the Panel unanimously concluded that "after [22] years of system wide
litigation... the City of New York has earned the opportunity to go forward into
a new era," without court oversight. Despite a completely revamped intake
and eligibility process incorporating virtually all of the Special Master
Panel's recommendations, the litigation resumed in 2005. One year later,
in February 2006, the City filed a motion to dismiss the case on the ground that
the decades-old complaint was moot. Responsive papers were due to be filed
this week; however, the parties began this successful round of settlement
negotiations in early August.

Transformation of New York City's Homeless Services System
Under the Bloomberg Administration

The Bloomberg Administration released the first-ever strategic
plan for the Department of Homeless Services in June 2002. That plan recognized
that the agency must invest in prevention, permanent housing placements, and
other proactive management strategies - rather than simply relying on shelter as
the "one size fits all solution" to housing instability and homelessness. The
plan recognized that ending the long-standing litigation and, thereby, returning
management responsibility to the public agency, was critical to further
improving results for those in shelter. In 2004, Mayor Bloomberg released a
5-year strategy to end chronic homelessness that built on these goals and set
ambitious targets for reducing homelessness in New York. Key accomplishments in
the family shelter system over the past six and a half years include:

Improved Intake ProcessIn 2006, the Bloomberg
Administration shuttered the Emergency Assistance Unit, a longtime focal point
of litigation and conflict. In its place, the City established a new intake and
application process, which was informed by recommendations from the Special
Master Panel. These reforms reduced processing and waiting times for clients. In
2003 it took roughly 20 hours over multiple days for a family to move through
the application process; today the process is completed in a single day. In
addition, the facility is better configured to accommodate applicants, with
intensive supports and services available and on-site coordination with other
city agencies.

Expansion of PreventionHistorically, DHS
played no role in the City's efforts to prevent homelessness, despite the fact
that the agency had the greatest incentive to try and help individuals and
families avoid costly shelter stays. Under the Bloomberg Administration, the
department developed and implemented citywide the Homebase prevention program,
which provides a series of interventions-short-term financial assistance,
benefits advocacy, family and landlord conflict resolution-to help those at risk
of entering shelter stabilize and remain in their home communities.
Homebase has helped 9,500 families and individuals at risk of becoming homeless
stay in their homes and avoid emergency shelter. In addition, much more
aggressive efforts are now made at intake centers to help families and
individuals avoid homelessness and return to housing in the community.

Record Housing PlacementsBecause shelter is
not meant to provide long-term housing, the Bloomberg Administration undertook a
series of reforms to help greater numbers of those in shelter find and secure
housing in the community more quickly. To date, more than 175,000 individuals
(including individuals in families and single adults) have been moved into
permanent housing on Mayor Bloomberg's watch. This is a result of performance
based incentive programs to encourage nonprofit shelter providers to work
aggressively to move families to permanent housing, rental assistance
innovations, and increased responsibility standards for clients.

"This agreement is a testament to the remarkable transformation
over the past years for homeless family services," said HELP USA President and
CEO Larry Belinsky. "If circumstances had not changed for the better the
parties involved would not have come together on this decision, one that will
only improve the level of services and outcomes for clients. Each DHS partner
will be positively impacted by this resolution and DHS' ability to govern its
own system."

"Protecting our
most vulnerable New Yorkers must be a top priority. This historic agreement solidifies
our commitment to ending homelessness and serving homeless families in need," said Councilmember
Bill deBlasio.